SA’s refinery collapse cost R76bn in extra fuel imports
A South African Reserve Bank report reveals that the decline of domestic oil refining capacity has cost the economy R76bn in excess import costs. The closure of refineries since 2020 has increased the nation's vulnerability to global price shocks and resulted in significant job losses.
Why it matters
It highlights the macroeconomic risks of industrial decline and energy dependency for emerging markets.
South Africa spent about R76bn more than it would have importing refined petroleum products between 2021 and 2024 had it not allowed its refining capacity to wither away, exposing the economy to the vulnerability of external shocks.
The economy also paid the price in job losses, with 5,400 jobs cut as a result.
These are observations made in notes by economists published by the South African Reserve Bank last week.
South Africa’s imports of refined products remained relatively stable at about 25% in 2010-19. However, this changed in 2020 when refineries responsible for almost half of South Africa’s refining capacity closed , with imported refined products filling the gap, raising exposure to global price shocks and shipping disruptions.
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